“Education is our greatest opportunity to give an irrevocable gift to the next generation”
Ernie Fletchern
We are delighted to present Issue 16 of the Private Client magazine to our readers, The Future of Private Client Finance: Next Gen Wealth Edition. This issue delves into the multifaceted landscape of Next Gen Wealth, offering an exciting collection of articles from across the Private Client community.
We extend our sincere thanks to our valued corporate partners, contributors and readers for their support in bringing Issue 16 to life. Do keep an eye out as we continue to offer events and content from within the Private Client community.
The ThoughtLeaders4 Private Client Team
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CONTRIBUTORS CONTENTS
Úna Smith, Accuro
Peter Le Geyt, Accuro
Edward Garrett, CAF
Dominique Burnett, Fairway Group
Chris Mourant, Fairway Group
Richard Joynt, HIGHVERN
Josh Lewison, Radcliffe Chambers
Nitrisha Doorasamy, Standard Bank
Andrew Miller, Bedell Cristin
Charlotte Thorne, Capital Generation Partners
Velasco, Cuatrecasas
Sophie Voelcker,
Offshore Welcomes Onshore
#ODW2025 - where 100+ international experts from the US, UK, Europe, LATAM, and Asia gather in Cayman for the first time to debate and discuss the growth of dispute resolution in the offshore world.
It’s a week of networking, dynamic discussions, and thought-provoking content, all aimed at bridging onshore and offshore expertise and reinforcing a forward-thinking legal community.
Meet offshore lawyers from the Cayman Islands, BVI, Bermuda, Bahamas, Channel Islands & IOM, and more to learn from their expertise, assess recent cases and gain insights into ongoing regulatory developments impacting offshore disputes.
When is the right time to reveal and discuss the true extent of your wealth with your heirs?
It has been widely reported that the largest transfer of wealth in history will be made to the next generation over the next two decades. As Trustees we are aware of how important and daunting a consideration this is for parents.
It is usual for parents to naturally be reluctant to reveal the full or even a partial extent of the family wealth, in so much as they will often want their children to develop valued relationships and set their own path without being burdened with this knowledge. It is true that having wealth can and does have the potential to affect relationships and friendships detrimentally. We find that most parents, especially where young
TIMING
IS
EVERYTHING:
SUCCESSION PLANNING AND REVEALING WEALTH TO THE NEXT GENERATION
adults are involved, wish their children not to be exposed to these risks and would prefer to delay the transfer of wealth knowledge. In some cases, until after their death.
Parents may think that they are making these decisions for all of the right reasons but is this the right approach? How long should wealth knowledge be withheld from the next generation?
Discussing family money will be for most a difficult subject but not to do so could leave the children exposed and subsequently parachuted into an environment they have not been prepared for.
Each and every family demographic is different and no doubt there are a multitude of other considerations that may arise or delay wealth discussions.
Wealth succession planning is more than just passing assets from one generation to the next. It involves strategic thinking, communication, and tailored strategies to ensure a smooth transition in order to leave a lasting financial legacy.
Deciding how and when to pass wealth to future generations can be complex. Research shows that 70% of families experience difficulties in intergenerational wealth transfers, with 67% citing succession planning as a major concern.
Health issues in the older generation – There are over 55 million people worldwide living with dementia, this will reach 78 million by 2030
Authored by: Úna Smith (Client Director) and Peter Le Geyt (Senior Manager) - Accuro
and 139 million by 2050. Bearing these figures in mind the health of the older generation needs to be considered when looking at the timing of the transfer of wealth to the next generation.
As Trustees and advisors to families we are focused on promoting and assisting the preparation of the next generation for the take on of this wealth and see this as an important and essential exercise in succession or inheritance planning.
Intergenerational transfers importantly also include the passing on of a legacy of values together with an understanding of philosophies and philanthropic endeavors. The next generation must prepare for their roles as the future stewards of the family wealth, acknowledging the responsibility that this brings. This can be daunting in an ever-changing economic environment. By engaging with professional advisors, guidance can be provided to navigate the legal, tax and other complexities to ensure a thorough understanding and compliance with their future financial responsibilities.
involved. Providing a history of how the wealth was built and the parents’ intentions for how they perceive the wealth being used in the future will set the landscape. As mentioned previously the next generation may have differing opinions but this knowledge will be useful in providing focus for future discussions.
parents trust that the next generation will be in a position to manage their wealth responsibly and competently upon transferwhenever that might be.
Effective succession planning starts with early communication. Family disputes often arise from poor communication. An approach would be to engage the next generation casually and conversationally initially and once a baseline financial literacy is established, involve them in strategic discussions about investment management and succession planning.
The approach to these conversations will differ dependent on age and circumstances but engaging with children early will begin the process. The involvement of trusted family members or intermediaries in the process, at some stage, to run discussions over time may help to alleviate any awkwardness in discussing finances for all parties
By enabling the next generation to have a seat at the table, learn financial literacy and grow as part of a family unit early on, it encourages a stronger unified family to emerge and could reduce possible future conflicts when providing for future succession planning from one generation to the next.
Having an independent party such as a trustee at the table can create an environment whereby complex issues and relationships can be raised and debated, which may not otherwise happen within certain family situations. Trustees can help the next generation to acknowledge the emotional attachment the first generation has in relation to the family wealth and / or the business that led to the creation of the wealth.
The next generation comes away with the knowledge needed and will be comfortable with the legacy they are to take on.
Next generation wealth succession planning requires thoughtful consideration, open communication, and a tailored approach. By actively managing your financial legacy, you can ensure a smooth hand-off and empower future generations to continue building upon your success.
Understanding the interests and motivations of the next generation is crucial. By involving them in the planning process early on they are more likely to nurture and expand the family’s wealth.
Succession planning isn’t just about numbers, it’s about fostering a legacy that endures.
The key to these discussions is listening and being aware of the emotions which may come into play. The trustees’ communication skills are of paramount importance here, as mediation may be necessary between family members as matters like the next great investment opportunity, ESG and Sustainable Investing are brought to the table by the younger generation.
The outcome of these discussions would hopefully be that the
DIFFERENT BY DESIGN
Accuro specialises in trust structures for high net worth individuals and families seeking to responsibly preserve wealth across generations.
Being wholly management and staff owned, Accuro has the freedom to pursue its mission with passion. The way we operate and who we partner with, can only be made possible by our independence.
ENGAGING THE GIVING GENERATION
Authored by: Edward Garrett (Head of Private Clients) - CAF
The ‘boomer’ to ‘zennial’ intergenerational wealth transfer frequently dominates discussions in the professional services sector, particularly around how private client advisers can engage and serve new clients. Because the next generation are expected to be the most significant charitable donors in history, for financial and wealth advisers, part of the answer lies in harnessing the topic of philanthropy to better engage next gen clients.
Providing a holistic service has long been an important way of ensuring client satisfaction. Now, with attitudes towards philanthropy changing, the need to provide advice on charitable giving is ever greater. Younger donors are far more likely to be drawn to impact investing or mechanisms which allow them to choose both social or environmental and financial returns than for example, the more traditional family foundation model.
Our research found substantial demand among millionaires for help with their charitable giving.
What’s more, this demand was significantly greater among younger millionaires aged 18-34 (57%) and 35-54 (49%) than among those aged 55 or older (34%)1.
These findings suggest this is a key topic advisers should be utilising in prospective client conversations.
But, only a quarter (26%) of advisers say they have broached the subject in in the past.
This clear statistical discrepancy represents a market opportunity, but there is a lack of skills and knowledge in the sector regarding the subject of philanthropy that is holding advisers and their businesses back. CAF found that only 5% of advisers feel very confident discussing the topic with their clients.2
A fifth of advisers do draw a direct link between giving philanthropy advice and winning new business though. Those who gave philanthropy advice more often were also more likely to make this connection, showing its real impact as well potential.
Advisers who worry it is too personal a topic to broach, should consider the tax incentives associated with charitable giving. If a client is donating to charity every year, it is your responsibility as their adviser to be aware of this and highlight the potential financial implications of these donations.
So How Can Advisers Raise This Topic With Potential or Existing Clients?
One of the simplest ways that advisers can broach the subject of charitable giving is to include philanthropy as part of an initial fact find. It’s also the most tactful way to raise a subject that some clients may find too personal or simply not be interested in. Yet nearly three-quarters of advisers told us that they don’t do this, meaning they may be missing out on the chance to build deeper, more trusted relationships with clients from the outset.
It should however also be noted that just because a client wasn’t interested initially, doesn’t mean they never will be. There are specific points throughout the duration of one’s life when a conversation around charitable giving can be more effective. Just as with other areas of the wealth conversation, milestones such as a successful business event, inheriting some funds, or thinking about writing a will, provide an adviser with multiple touchpoints over time to re-engage on the topic.
their lifetime - almost a third (31% ) of HNW want younger members of their family to carry on their giving or philanthropic legacy after they’re gone.3 A good adviser can help their clients by equipping them with the knowledge of different giving mechanisms and approaches available to them. This will in turn encourage more of these conversations within families, at a much early stage.
As philanthropy advisers, we know it is essential to understand the motivations, values and attitudes of clients, as well as the mechanisms available to them, to ensure philanthropy is as effective as it can be.
Drawing out these more emotive perspectives can help deepen the bond advisers are able to develop with clients and their families.
emotionally driven. One couple who have been longtime CAF clients demonstrate how it is possible to be both. Having recently brought their daughters – both in their twenties – on board with their giving, they are making decisions as a family on what causes they donate to. They came to us to discuss how to support a health issue they have personal experience of and settled on a charity which everyone felt connected to, Wellbeing of Women. For the next three years, donations to Wellbeing of Women from their daughter’s CAF Charity Account will be matched from the family’s CAF Trust. They still make separate decisions about other donations but share their commitment to this particular charity.
Discussing personal finances with other family members, particularly the next generation, can be a sensitive topic to broach, with parents largely saving legacy conversations for the future, with few formal discussions of the topic. Yet, philanthropy advice can provide an opportunity to bridge the generations and engage a client’s family during
Principally, many of our clients view philanthropy as a family affair - they may want to make decisions collectively or create a family legacy. We know of several family offices who have given their younger representatives control over pots of philanthropic funds to invest in innovative ways. That way they can learn about what it means to be responsible for significant amounts of wealth as well as seeing the impact of their decisions.
Philanthropy can also play a role in succession planning. We’ve been working closely with a client and his family, alongside his adviser, as his daughter, who is in her forties, transitions into taking the lead on the family wealth. She is actively engaging her young children too, taking the whole family on a trip to Thailand to visit one of the schools for migrant children they’ve been funding to help them understand the impact of their giving, even at this early stage in their lives.
Professional advisers do not need to be philanthropy experts, but they should understand their clients and know where to turn for expertise. Forwardthinking advisers looking to provide a holistic service to the next generation would be amiss to ignore this rich topic of engagement.
While we would encourage our clients to be strategic in their charitable giving in order to achieve greater impact, we know that giving is ultimately
As an independent, owner-managed fiduciary group Fairway is committed to delivering client-centric solutions that endure. Headquartered in Jersey, with offices in Dubai and Kuwait, we offer seamless, director-led services across Private Client, Corporate, Funds, and Pensions. Our award-winning team combines innovative solutions with administrative and technical excellence, ensuring each client's unique needs are met with precision and care.
For our Private Clients, we offer bespoke services tailored to manage and transfer family wealth across generations. Our offerings include Trust, Company and Foundation Incorporation and Administration, Directorship Services, Family Office Solutions, and Private Trust Companies. Our director-led team delivers tailored, long-term solutions for effective family wealth management and generational wealth transfer.
Consciously independent.
60-SECONDS WITH: DOMINIQUE BURNETT
DIRECTOR FAIRWAY GROUP
Imagine you no longer have to work. How would you spend your weekdays?
I like to think I’d finally be getting round to finishing my collection of short stories for publication. I also enjoy swimming and walking, so would probably do a lot more of that.
What do you see as the most rewarding thing about your job?
The satisfaction of solving complex problems each day, whether these are client matters or internal to the business. I like a puzzle!
What book do you think everyone should read, and why?
Books are very much horses for courses, and I hate being told what to read. But if someone was desperate for a recommendation, then I’d suggest the short story by Amy Hempel: In the Cemetery Where Al Jolson is Buried. I defy anyone to read it and not break their heart.
What legacy would you hope to leave behind?
I’m not sure I want a legacy to leave, but I hope to be remembered as someone who was good at what they did and nice to be around.
Do you have any hidden talents?
I make really good gravy.
What’s the most important quote you’ve heard that you have adapted to your personal or professional life.
The attitude you have as a parent is what your kids will learn from more than what you tell them. They don’t remember what you try to teach them. They remember what you are - Jim Henson. I think this applies as much in the workplace as at home.
Is there anything you want to do/achieve that you haven’t already?
I’d like to put my experience from work into a philanthropic context.
What piece of advice would you give to your younger self?
Don’t be afraid of failing, life carries on.
Where has been your favorite holiday destination and why?
I absolutely loved a weekend break we had in Melbourne once – it’s a beautiful city with a great atmosphere, fun things to do and fantastic bakeries in Saint Kilda.
Dead or alive, which famous person would you most like to have dinner with, and why?
Mark Twain – wise and funny, I’d love to spend an evening listening to him.
What’s your go to relaxing activities to destress after a long day at work?
If the weather is good, a walk in the sunshine; in winter, a glass of wine on the sofa and something funny on TV.
What brings you the most joy.
My children, who also bring me tears, frustration, huge love and strange insects they found in the garden.
SUCCESSION SERIES: SETTING THE RIGHT FOUNDATIONS
Authored by: Chris Mourant (Associate Director) - Fairway Group
In the dynamic landscape of the Middle East’s financial sector, the Dubai International Finance Centre (DIFC) and the Abu Dhabi Global Market (ADGM) have played pivotal roles in propelling economic and financial growth. Originally established to foster regional development, they have both now evolved and developed into independent offshore jurisdictions with their own laws and legislation.
More recently, there has been a strategic shift in focus with both the DIFC and ADGM aiming to attract foreign investment. They have also set about improving the skillsets and experience of their workforce in order to encourage retention of wealth within the region, rather than it being invested or managed in/by a competitor finance centre. Subsequently, we have seen a raft of legislative changes within the UAE which further aim to enhance the region’s reputation while also boosting the UAE economy. Many draft laws and legislative amendments were established during the “Year of the 50th” and are intended to keep pace with the developmental achievements of the UAE and reflect the country’s future aspirations. Over 40 laws were implemented, which together represent the largest legal reform in the young nation’s 53-year history, all with the aim of enhancing the openness of the UAE’s business climate in a way that supports the competitiveness of the national economy.
Facilitating Local Asset Structuring: The Introduction of the Foundations Legislation
The DIFC and ADGM recognised that, whilst the vast majority of family wealth was held in immovable assets within the Middle East, a portion of wealth was invested internationally and often structured in an offshore jurisdiction such as Jersey, BVI or Cayman Islands. There was also restrictive legislation and red tape that prevented families from being able to structure their local assets using offshore vehicles administered by their existing service providers (often Trust Companies) which resulted in them being forced to own assets in their own name or that of several family members.
Having identified a potential succession issue, the DIFC and ADGM (and later RAK International Corporate Centre), introduced the foundations Regulations in 2017/18 1 in order to provide families
with a mechanism to be able to properly structure their assets whilst at the same time, promoting themselves as credible and world class finance centres which cater to family offices. The introduction of such legislation opened the door for existing service providers in the more mature offshore finance centres to begin to assist families with their local structuring requirements and succession planning needs.
Legislative Milestones: Family Business Law and Beyond
Subsequent to the introduction of foundations legislation, The UAE has since enacted the Family Business Law which comes as part of the UAE’s efforts to support family businesses as they have been identified as being of strategic importance to the future economic transformation of the UAE.
A number of initiatives were launched to develop the family business industry, most notably the FB-X family business platform and the ‘Thabat’ programme which aims to turn 200 family-owned businesses into major companies by 2030, with a market value of over Dh150 billion and annual revenues exceeding Dh18 billion. The programme, the first such initiative in the region, assists families in transforming their ideas into viable business projects by adopting emerging technologies. The programme has united over 45 families across 4 generations, creating new and sustainable business visions, driving the expansion of their businesses into new economic activities and sectors. Due to the programme’s success ‘Thabat 2.0’ has officially launched.2
governance and regulatory aspects that may be required as part of the ownership structure.
• Family members can be appointed as beneficiaries and can also be appointed as council members who make key strategic management decisions.
• Any assets that are owned by the foundation no longer form part of the founder’s estate when he/she passes away, which allows the family business to function without any delays or interference of the courts whilst they determine the succession of the personal estate.
Family Wealth Structuring in the UAE: The Need for Family Offices and Strong Governance
Fairway acknowledge that although the UAE foundation may be the starting point for any structuring requirements, there may be a need to establish a family office arrangement in order to provide a truly holistic approach to family wealth structuring. It is only when we begin to talk to high net worth families that we can establish their overall approach to risk and asset allocation, as well as how the family dynamics will play a prominent role in any structuring discussions.
The Rise of Foundations
UAE Foundations as Viable Solutions
With an increased focus on family businesses, it is imperative that these families have access to high quality succession planning advice and they each put plans in place to ensure a smooth passing of assets to future generations. One of the key objectives when creating a successful succession plan is to ensure that the correct structures are used, which are legally enforceable. The UAE foundation can be a viable solution which not only helps meet family objectives, but also goes some way to remedying a long-standing issue of having to relinquish ownership and control of assets to a Trustee when establishing a Trust.
Benefits of a UAE foundation:
• The foundation itself can be structured in a Shariah compliant manner to ensure compatibility with religious views.
• The founder can retain control over the assets whilst taking advantage of the benefits of having professional Trustees appointed as part of the dayto-day management of the foundation.
• Such professionals can assist families with overall strategy, corporate
2 https://www.thabatventures.ae/
Interestingly, as at January 2024, the total number of foundations established in the UAE was 1,000. To put this into context, Jersey enacted foundations legislation back in 2009 and only has approximately 216 active foundations. This shows that there has been a real uptick in demand for this type of structure in the region, as well as advisors promoting such structures which can be used to meet a breadth of family objectives including transferring wealth to the next generation.
It is common that many large high net worth families already have an existing relationship with an offshore service provider. The structure that has already been established is likely to contain assets located in foreign jurisdictions i.e. those assets that are based outside of the UAE. It is expected that the legislative changes will go some way to not only encourage families to begin thinking about legacy planning but also providing a clear solution for some of the inherent issues encountered historically.
One can argue that the UAE government has provided the foundations (excuse the pun) to provide all the necessary ingredients for families to be able to access advisors who can assist with establishing the best structure that meets the needs of the family. There is at present no requirement for service providers to have a physical presence in the UAE to be able to act as council members of the foundation, although there is a requirement for a registered agent to be located in the region. This very much provides the family access to existing overseas advisors whilst knowing that the legal structure is incorporated and managed under domestic legislation.
Fairway believes that the upward trend of foundations being established in the UAE will continue and that the differentiating factor will be the experience that professional service providers can provide. Good corporate governance will be imperative to ensure that the foundation continues to comply with local and international regulation and reporting requirements and there would appear to be no greater opportunity for Middle Eastern families to access professionals based in a well-established finance centre such as Jersey.
THE ROLE OF JERSEY FOUNDATIONS IN MODERN WEALTH MANAGEMENT
Authored by: Richard Joynt (Head of Family Office) - HIGHVERN
As the landscape of global wealth management evolves, the use of Jersey foundations has gained significant traction among high-net-worth individuals (HNWIs) and family offices. These structures, while still relatively new in the context of some jurisdictions, have proven their value as flexible and robust tools for managing complex wealth arrangements.
management sphere as they offer a unique hybrid approach.
They are “orphan” structures, meaning they have no shareholders.
Changing Regulatory Environment
Instead, they are governed by a council, akin to a company’s board of directors, and can have beneficiaries much like a trust.
A Blend of Trust and Corporate Attributes
Jersey foundations stand out as innovative structures within the wealth
This combination makes them adaptable to the diverse needs of international clients. One of the most compelling features of Jersey foundations is the balance of control and protection they offer. The roles of Founder and Guardian, along with Council Membership, allow the client and advisers to have significant influence on decisions. This flexibility is particularly appealing to clients from civil law jurisdictions such as Australia and the Middle East, where traditional trust structures may not be as familiar or desirable.
Historically, Jersey foundations enjoyed a relatively low reporting burden, with minimal public disclosure required. However, this changed with the introduction of the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020, which came into effect in January 2021. Under the new regulations, Jersey foundations are now required to file tax returns, including copies of financial statements, and disclose key stakeholder information to the Jersey Financial Services Commission (JFSC). This shift towards greater transparency is essential for maintaining Jersey’s reputation as a well-regulated jurisdiction. In addition to
regulatory disclosures, service providers are now faced with increased client due diligence (CDD) requirements from banking partners.
Additionally, the growing demand for CDD on regulated members has led clients to explore whether a named individual or an incorporated entity should serve in this capacity. Appointing a senior director from the service provider as the regulated member can streamline the compliance process, although it does place additional responsibilities on that individual and their firm. This strategic shift not only ensures regulatory compliance but also offers a balanced solution to privacy concerns.
A Strategic Approach
The latest regulatory changes regarding Jersey foundations present a different strategic approach for clients to enhance their privacy and compliance strategies. By opting to use a company they beneficially own, with directors from their service provider, clients can maintain a degree of privacy while still meeting regulatory requirements.
What The Future Holds
Despite the changes, Jersey foundations remain a compelling option for managing complex wealth structures, particularly for clients in civil law jurisdictions. Their ability to combine the protective features of a trust with the operational flexibility of a corporate entity makes them an ideal solution for a wide range of needs, from succession planning to philanthropic endeavours. Looking ahead, the key to maximising the benefits of Jersey foundations will lie in strategic planning and expert advice. As regulatory demands continue to evolve, family offices and HNWIs must work closely with their service providers to ensure that their foundations are not only compliant but also optimised for their specific goals. With careful management,
Jersey foundations can continue to serve as powerful tools in the global wealth management toolkit, offering both flexibility and security in an increasingly complex world.
The Great Wealth Transfer is well and truly under way, with blessing applications booming. A typical pattern behind such an application is that the trustee of a discretionary trust has decided to make a significant and permanent transfer of trust assets to some, but not all, of the potential beneficiaries. The intended recipients are often the next generation (such as the settlor’s children) but not the generation after that. That subsequent generation will often consist of or include minors and unborns, who will have no direct say in what happens to the trust. This article considers what options may be open to minors and unborns when they ripen into maturity and wonder where the transgenerational wealth has gone.
The test for obtaining the court’s blessing has been formulated in different ways. The common elements are
(1) That the trustees have the power to do what they propose,
(2) That they have in fact decided to do what they propose,
(3) That the decision is one that a reasonable body of trustees could have reached, and
(4) That the decision is not fatally tainted by a conflict of interest. It has also been suggested that the court should be satisfied that the trustees are not acting for any collateral purpose and that the decision must both have been reached by a proper process and have resulted in a rational outcome.
Where minors and unborns are concerned, there are added layers of complexity. First, neither minors or unborns can represent themselves, and so someone else must be appointed to represent them. Second, there may be a great number of minors and unborns, possibly with different interests, and so it may be desirable to appoint a smaller number (or even just one) to represent the whole of their class.
If there is any omission in the joinder or representation of interested parties, those who have not been joined or are
not represented will not be bound by the eventual decision of the court.
So it is important to understand who is represented and who is not and to decide whether it is necessary or proportionate to find representation for those with remote interests.
Once the parties have been constituted, the court can consider the application. On the application, the trustees must put sufficient material before the court to satisfy the test. The level of disclosure has been described as “full and frank” (in Tamlin v. Edgar [2011] EWHC 3949 (Ch)), although that phrase was not explicitly endorsed by the Court of Appeal when citing that case in Cotton v. Brudenell-Bruce [2014] EWCA Civ 1312. But gaps in the evidence can lead the court to refuse an application, as in Hawksford Jersey v. A [2018] JRC 171, where the trustee had not sought advice about the tax consequences of realising a substantial capital asset.
The effect of the grant of the blessing was recently considered – although obiter – in Denaxe v. Cooper [2024] Ch. 65. The case concerned the effect of the court’s approval of a proposed action by receivers, but Asplin LJ analysed the consequences in the context of trustees. The important point that emerges is that a blessing does not confer a blanket immunity for the consequences of a particular action. In fact, the blessing creates an issue estoppel: parties to the decision or their privies cannot relitigate the matter that the court has decided. The effect of a blessing post-Denaxe is thus narrower than had previously been thought in some quarters. It may also have a different jurisdictional basis, in that it relies on general principles applicable in litigation, rather than on the court’s supervisory jurisdiction over trusts.
Returning to the disappointed minors and unborns, a number of lines of enquiry are now discernible once they reach adulthood and wonder where the
money has gone.
The first is whether they were joined to the proceedings, whether themselves or by a representative, and – more importantly – that their interests were properly represented. The former issue is likely to be clear cut, but the latter may be less so.
A similar issue arose in Barker v. Confiance [2018] EWHC 1965 (Ch), the sequel to the court’s approval of a compromise on behalf of minors. The underlying claim was to set aside the creation of a trust. The beneficial class included the settlor’s children, of whom there were five by three mothers. One of the children, whose mother was sympathetic to the application, was appointed to represent the other minors, including two, Tom and Freya, whose mother was thought to be likely to “cause problems”. Only the litigation friend of the appointed child participated in the approval of the compromise.
The other children (or their parents or guardians) were deliberately not told about the claim, involved in the negotiations, or consulted about the compromise. The court approved the compromise.
Tom and Freya sought to escape the consequences of the approval. After a number of missteps, they applied for a direction that the representation order did not apply to them. The court noted that the terms of the rule did not prescribe any test, and so the court “should show its usual concern for fairness and justice, efficiency of court procedures and the need for finality in litigation”. As part of his deliberations, the judge embarked on
a detailed consideration of what would have happened if Tom and Freya had opposed the compromise, concluding that the court would have approved it anyway. Thus, despite their ferocious attack on the approval, the application was dismissed and Tom and Freya were bound by the compromise.
If similar reasoning applies on a blessing application, it is not enough to undermine the adequacy of the representation. There must be some merit in what the disappointed beneficiaries intend to do next.
That brings in the possibility of challenging the merits of the application. The major areas of attention will be the evidence that was given to the court and the scope of the relief that was sought and granted. The two shade into each other to some extent.
On the evidence put before the court, the disappointed beneficiaries can try to show some deficiency in the material that was provided. That in turn raises questions as to what the trustees had to prove (which also goes to the scope of the application) and what they were obliged to produce.
For example, returning to Barker v. Confiance, if the trustees knew about or anticipated serious resistance on behalf of minors and unborns, should that have been disclosed to the court? Or if those interests were deliberately not consulted, should that have been disclosed to the court? Since the trustees have to satisfy the court that they have conducted a proper process, then the reason for overriding or dismissing dissenting views ought to be properly addressed. Likewise, undisclosed conflicts of interest may provide scope for challenging the underlying decision to grant a blessing, if those conflicts are serious enough.
The scope of the original application is a means of challenge yet to be developed and depends on a close reading of the decision in Denaxe. Disappointed beneficiaries must show that the issue
they now raise was not one that was determined on the earlier blessing application. That is not a pure question of framing: Asplin LJ was precise in holding that the question was the issues determined and not the juridical origin of the subsequent cause of action.
So it might not be enough to say that the court hearing the blessing had determined that the trustee had complied with its equitable obligations in making the decision, but did not decide that the trustee had discharged its duty of care. But it might be open to the disappointed beneficiary to identify some issue that the court had not determined. For example, the prior court might have considered process, outcome and conflicts but not proper purpose. Assuming that proper purpose is a separate issue from adequate deliberation, the beneficiaries could argue that it was open to them to contest the trustee’s decision on that ground. In the light of Barker v. Confiance, it might still be necessary to show that there was at least some
prospect of succeeding on the issue now raised, although by reducing the test to one of issue estoppel the question is a legal one, and not merely a matter of the court’s general discretion.
A harder question is a potential sting in the tail of Asplin LJ’s judgment: a parenthetical mention of issues that “could and should have been determined” in the earlier proceedings.
It may be open to a trustee to rely on the concept of Henderson abuse to bar a later claim. Again, the boundaries of a defence on those lines will have to be worked out – it may, for example, be said that it is for the trustee to raise all the issues for determination, and beneficiaries commit no abuse of process when they later identify an issue.
Following Denaxe, trustees seeking blessings – and, more importantly, their advisers – must be increasingly astute in ensuring that all issues are covered when approaching the court. Any failure may leave a gap open to be exploited.
Radcliffe Chambers Private Client
(Chancery:
We
Traditional, Chambers High Net Worth 2022)
PASSING THE TORCH: ENGAGING THE NEXT GENERATION IN FAMILY WEALTH
Authored by: Nitrisha Doorasamy (Manager) - Standard Bank
It is true that traditional wealth planning is being revolutionised by the influence of the next generation (the “Next Gen”).
Subsequently, we are observing that effective dynastic planning models often involve engaging the Next Gen in the governance of family wealth structures. This strategic involvement not only prepares the Next Gen in relation to the effective management of a family’s wealth but can also strengthen the family’s legacy, adaptability and cohesion.
fostering a sense of responsibility. The Next Gen also bring new ideas and fresh perspectives which can lead to innovative strategies and approaches in wealth management.
A common concern, however, for the older generation who may have earned the wealth, as settlors or founders of these family wealth structures, is whether the Next Gen have the ability to manage, respect and sustain these wealth planning frameworks?
Family Advisory Committee
In addition to a seamless transition of generational wealth, other benefits observed are continuity and stability during the generational transition, alignment of interests with the long term goals of the family wealth,
It can be said that a legacy is not merely a collection of assets, it embodies the principles, ethics, and aspirations of the founders. In this article we will explore a simple mechanism that enables the older generation to pass down these core values and engage the Next Gen in the management of family wealth structures, without granting them significant power.
A favoured solution would be to establish a family advisory committee, that sits alongside a family trust.
A family advisory committee is a body made up of family members and or trusted advisors (the “Committee”). Although the Committee is formally drafted into the trust instrument, as its title suggests, its function is purely “advisory”. The Committee does not have decision making powers nor does it hold any fiduciary responsibilities. This is important for a number of reasons including the Committee not being deemed controller, which may
be risky for tax reasons and also possibly reportable under the Common Reporting Standards (CRS) and/or the Foreign Account Tax Compliance Act (FATCA).
Ideally, the Committee would be subject to its own set of regulations which does not form part of the trust instrument (the “Regulations”).
The Regulations set out the terms and conditions of the Committee including voting rights and how Committee members are to be appointed and removed.
The role of the Committee is to discuss and decide on pertinent issues for the family such as philanthropy, ESG, and impact investing or it may even include the preservation of family harmony. By way of its Regulations, the Committee will vote on matters and make recommendations to the independent trustee. The trustee has a duty to consider those recommendations and, in accordance with its powers under the trust instrument, will exercise its discretion as to whether to further those recommendations.
It is essential to highlight here that the recommendations are not legally binding upon the trustee or any other party. This works well because the settlor can rest assured that, so long as a robust and diligent trustee has been appointed, no absurd recommendations will be considered and implemented. So long as specific powers are not carved out, the trustee will hold absolute and sole discretion, so in the event that the Committee makes unreasonable recommendations, the trustee is at liberty to simply reject those requests.
The key is to ensure a balanced representation of both the older and younger generation when establishing the Committee. Once the older generation members have confidence in the younger generation’s competence to handle tasks independently, they can gradually step back or formally resign from the Committee.
We are seeing today that the Next Gen are progressively expressing a desire to leverage their family wealth resources for global betterment. Being a member of the Committee is an effective way to achieve this, so long as it is aligned with the rest of the family’s wishes.
This Committee allows for open dialogue and debate between the members with the aim of furthering these objectives.
For more complex and layered family structures, different committees may be formed to laser focus on
topics of interests such as an ‘education committee’ or ‘ESG committee’.
The Family Advisory Committee provides an effective means for the older generation to impart their ethos and values, concerning the management of family wealth.
Conclusion
By involving the Next Gen in governance, the matriarch and patriarch of the family can promote a culture of open communication, shared decisionmaking and collective responsibility. This approach helps align the interests and expectations of all family members, reducing potential conflicts and fostering a sense of shared purpose. It ensures that the family’s wealth is seen as a common resource to be managed collaboratively as a lasting legacy, rather than a sense of division.
To do things the right way requires a personal commitment. A considered approach. That’s why we use decades of expertise and market knowledge combined with fundamental research to guide all our investment decisions.
Because when it comes to managing your wealth, it’s not just a job, to us: it’s personal.
We care for our clients’ assets like our own because we never forget who they really belong to. If you’re an individual, family, charity, trust or corporate looking for a global investment manager with diversified investment solutions, choose the one that is personally committed to your future. The one who does things the right way. The Melville Douglas way.
For enquiries please contact: Chris.stead@standardbank.com
THE CAYMAN ISLANDS RULE AGAINST PERPETUITIES-THE PERPETUITIES (AMENDMENT) ACT, 2024
Introduction
The Cayman Islands Perpetuities (Amendment) Act, 2024 (the “Amendment”), as passed by Parliament in July and in effect as of Thursday, 22 August 2024, has enacted major changes to the statutory perpetuity rules both in terms of the ability to have it disapplied for existing trusts and disapplying it for future trusts. The Amendment is specific to trusts and does not relate to interests in land in the Cayman Islands.
Previously, the Cayman Islands rule against perpetuities in respect of trusts was governed by the Perpetuities Act (1999 Revision) (the “Perpetuities Act”) which imposed a requirement for an ordinary trust to vest within a perpetuity period of 150 years, failing which it would be void, subject to a “wait and see” principle. As can be imagined, this has often created, at the very least, a concern that a settlor’s wishes may not be carried out in the long term and the complicated nature of the rules has always been a trap for the unwary.
The common law and statutory rules against perpetuities were developed as a body of law in England and jurisdictions with English based or similar common law-based systems to prevent people from tying up their assets, particularly land, indefinitely (in perpetuity). The rules require that certain future interests in assets that do not take effect immediately must be certain to vest within a defined period, known as the ‘perpetuity period’. Over time, many of these jurisdictions, including the Cayman Islands, codified these common law rules into statutory rules. However, over the
last couple of decades, there has been a growing recognition amongst such jurisdictions that the rules may not suit the modern trusts industry and the needs of intended settlors and the direction of travel has been substantially to modify or abolish the rule1. The Cayman Islands had previously moved partially in that direction in 1997 when it enacted the special trusts alternative regime (the “STAR Law”) which permitted STAR trusts (as opposed to “ordinary” trusts) to be of unlimited duration.
Authored by: Andrew Miller (Partner) – Bedell Cristin
1 Including the following jurisdictions : Bahamas (s3 Rule Against Perpetuities (Abolition) Act, 2011, Bermuda (s3 Perpetuities and Accumulations Act 2009), Guernsey (s16 (1) Trusts (Guernsey Law, 2007), Hong Kong (s3A(1) Perpetuities and Accumulations Ordinance (2013), and Jersey (s15 Trusts (Jersey) Law 1984).
Disapplication of the Rule For Future Cayman Islands Trusts
For future Cayman Islands ordinary trusts, the position is now very straightforward and similar to that for STAR trusts. Whilst the trust instrument may continue to state a specific trust period, this will no longer be required and the trust deed may permit the trust to be of unlimited duration. For the avoidance of doubt, in respect of an existing trust, if appointing out all the assets absolutely and then immediately re-settling them on a new trust is an option, that new trust could then be perpetual.
Additional Amendments For Foreign Law Governed and Existing Cayman Trusts
The amendments to the Perpetuities Act further provide that:
• Subject to the terms of a trust, if it is of unlimited duration and its governing law is changed to that of a Cayman Islands, it will continue to be of unlimited duration, even if it predates the Amendment; and
• The Cayman Islands Grand Court may, upon application, make an order to extend a trust period or to disapply the rule against perpetuities for those trusts or powers currently subject to the rule (an “Application”).
5. Any other person the Grand Court considers relevant.
The Court Must Be Satisfied That:
6. The Application would not be to the detriment to the beneficiaries; and
7. It is not in relation to disposition of land or an interest in land in the Cayman Islands (unless held through a company partnership or other entity).
Act (2021 Revision) in respect of the Cayman Islands Court granting an order approving the variation of a trust on behalf of incapacitated, minor and unborn beneficiaries so this may, in due course, inform the approach the Court will take.
Closing Comment
These changes were long awaited by leading private client and trust lawyers in the Cayman Islands and internationally and will, no doubt, further enhance the standing of the Cayman Islands as a jurisdiction of choice for international succession planning.
Application to the Grand Court
An Application May Be Made By:
1. A trustee, settlor or enforcer;
2. A person on whom powers are conferred, such as a protector; or
3. A person with a beneficial interest.
An Application Must Be Served On:
4. All interested persons; and
‘Not to the Detriment of the Beneficiaries’
As indicated above, an Application will not be granted unless the Court is satisfied that the extension of disapplication would ‘not be to the detriment of the beneficiaries’. The Amendment does not define such term, however, it is the same term as used in section 72 of the Trusts
HOW DOES THE NEXT GENERATION OF WEALTH OWNERS TAKE OWNERSHIP
OF THEIR FINANCES?
Authored by: Charlotte Thorne (Founding Partner) - Capital Generation Partners
As the next generation, you are the stewards of your family’s wealth, tasked with nurturing it for the benefit of future generations. It’s up to you to ensure your children’s children enjoy the same advantages you have had. Although this is a great privilege, it can also feel like an enormous responsibility. You may be young when you inherit, without much experience of managing wealth. This means you are faced with a huge undertaking, for which you may not necessarily feel equipped.
But breaking the task down into a few simple steps will start to make it feel more manageable. You don’t need to be an investment expert yourself; you just need to be attentive to what your carefully chosen managers are doing. If you know what you want and have the confidence to act assertively, the prospect of nurturing your family’s wealth should hopefully start to feel less daunting.
Step One: Set Your Goals
When it comes to managing wealth at any age and stage of life, the first step is always to set your own goals. This includes considering the purpose of your wealth, what you want your wealth to achieve, and a time horizon. Whether or not this particular pot of wealth is your only source of income will probably influence your goal setting too. For example, those with one source of income may want to take less risk
than those with a few different income streams.
These goals may change over time, and it will be up to you to keep your managers informed. If communication falters and something goes wrong, it could mean you lose money, or your financial goals are not met.
Understanding these variables will enable you to structure a set of
investment policy statements you are happy with.
Step Two: Understand That Nurturing Wealth is a Job
It’s important to understand that managing wealth is major task which should be taken seriously. The day-today management of your wealth will - in all likelihood - be outsourced, but that isn’t where the work ends. Your job is to make sure that your chosen investment professionals are doing what you’ve asked them to, that they are adhering to your set goals.
This doesn’t mean the professionals need micromanaging. It simply means that you need to take care and be attentive to what your managers are doing. There should be continuous communication between you and your managers, ensuring you are always actively engaged.
Step Four: How Do You Choose Your Investment Manager?
It’s important you select the right investment manager for you. If there is already a manager in place, ask yourself if you are happy with them. The right manager for previous generations may not be the right one for you. But bear in mind that moving away from the incumbent and choosing a new manager will be more work. If you stay with the existing manager, they need to understand that you are the main point of contact now, and not your parents.
When it comes to choosing a new manager, there are a few criteria to consider including past performance, fees, and most importantly, rapport.
Step Three: Understand The Basics of Investing
You don’t need to dust off any textbooks any time soon. Managing your wealth doesn’t necessarily require sophisticated knowledge of economics and markets. But understanding some of the basic principles of investing, such as compounding, diversification and liquidity would stand you in good stead. Covering the main asset classes would be helpful too.
These concepts are all fairly easy to understand and have a powerful impact on investing. You can more or less teach yourself the basics. You don’t need to worry about the detail of portfolio construction or specific hedge fund strategies, but you need to understand the basic building blocks of a portfolio. You can find plenty of information about investing online, or in various good books and podcasts.
Past performance is no indication of future performance, but you do need to see that the manager can generate outperformance across a variety of market conditions. Look for resilience in their long-term track record. A few basis points different in fees can really impact returns over the long run, so be careful to understand exactly what you are being charged. If you are offered something that seems too low, it may mean there’s a hidden fee being taken somewhere else. Always ensure you have complete clarity of the full fee picture before you proceed. If it isn’t clear, you need to find it out.
Finally, you need to like your manager. Not in the way of a close friendship, but you need to feel comfortable around them, able to tell them you’re not happy with something and raise a challenge if needed. The way they respond to your challenge will be the true test of the manager. You don’t want to be overly chummy with your manager, but you shouldn’t feel intimidated either.
Try not to be swayed by lavish gifts. Some managers you meet may offer you trips abroad, meals out in the finest restaurants or other enticing forms of entertainment. As tempting as it may be to accept these appealing gifts, they are merely sales tools and do not illustrate a manager’s competence.
Step Five: Considerations For Your Ongoing Relationship
The task doesn’t stop once you’ve found a manager you’re happy with. Like any relationship, it needs some ongoing work to ensure it stays helpful. Ask yourself: Is the manager responsive to your changing needs? Or do you feel they’re looking over your shoulder to your parents? Is their investment performance in line with your expectations?
As the relationship progresses and you learn more about investing, you may develop your own particular interests and want to incorporate them into your portfolio management (such as ESG investing). The more you learn about investing, and the more you understand your own financial requirements, the more confident you will start feeling with your manager. It’s up to your manager to help you through this process and ensure both parties are happy at all times.
Knowing what matters.
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CUATRECASAS
Imagine you no longer have to work. How would you spend your weekdays?
I feel that as a lawyer, I have a social responsibility. I would work in helping some organisations that assist women in difficult situations.
What do you see as the most rewarding thing about your job?
Getting to interact with so many amazing people!
What book do you think everyone should read, and why?
I don’t know if everyone should read it, but I recommend for example, The Marriage Portrait by Maggie O’Farrell.
What legacy would you hope to leave behind?
Great professionals who enjoy the job as much as I have done.
Do you have any hidden talents?
I think I come across as pragmatic and clear in my advice.
What’s the most important quote you’ve heard that you have adapted to your personal or professional life.
Don’t ever lose your curiosity for learning.
Is there anything you want to do/achieve that you haven’t already?
Make as many partners in the private client team as possible.
What piece of advice would you give to your younger self?
Enjoy every day, enjoy the journey, it is worth it.
Where has been your favorite holiday destination and why?
I love travelling, so it is difficult to choose one destination. Australia might be my favorite.
Dead or alive, which famous person would you most like to have dinner with, and why?
Barack Obama.
What’s your go to relaxing activities to destress after a long day at work?
Read novels or play tennis.
What brings you the most joy.
Singing with my choir and spending time with friends and family.
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THE GREAT WEALTH TRANSFER
Authored by: Sophie Voelcker (Partner) – Kingsley Napley
With an imminent Autumn Budget set to potentially make big changes to the way clients can transfer wealth to the next generation without taking a significant inheritance tax (“IHT”) hit, now is the time for them to consider making use of available tax exemptions.
Fail To Plan Or Plan To Fail… To Save IHT
For those with valuable family businesses, a vital exemption is “business relief”. Provided the business or asset was owned by the parent two years before making the gift, full IHT relief is available on a trading business, interest in a business, or shares in an unlisted company. 50% IHT relief may otherwise be available.
For families owning farmland, there is a similar exemption for qualifying agricultural property: either 100% or 50% IHT relief depending on the type of property where the property was owned and occupied for agricultural purposes immediately before its transfer: essentially for two years if occupied by the owner, a company controlled by the owner or their spouse/civil partner and seven years if someone else.
If a lucky parent has excess income in a year and can prove that they have
enough to meet their usual living costs, they may make regular gifts to their child from their excess income not subject to IHT. There is no limit on the value of these gifts which can be a valuable way to pass wealth on to the next generation free of IHT.
Generally, no IHT is due on any gifts a
parent makes to a child (a “potentially exempt transfer” affectionately known as a “PET”) if they survive making them by seven years, and three to four years between the date of the gift and death, taper relief may be claimed to reduce the IHT bill.
If a child or grandchild is getting married or entering into a civil partnership, this can be a useful way to pass down a little extra cash free of IHT: £5,000 to a child and £2,500 to a grandchild, in addition to the £3,000 annual exemption and £250 small gift allowance but again, this is not making a huge dent in the potential IHT bill for a wealthy client.
Can’t I Just Give My House to My Children And Still Live In It?
The short answer is: no! An IHT trap to watch out for is the “gift with a reservation of benefit” which is targeted at those who make a gift which would technically be a PET but for the fact that the donor has reserved a benefit and so the gift is still in their estate for IHT. The only way around this would be to pay the child a proper market rent (also reducing the value of the parent’s estate for IHT) but they need to have sufficient resources to fund this.
Many clients are surprised that there is no general IHT exemption for passing assets to children or grandchildren other than the residence nil rate band. This allows them to leave an extra £175,000 to their children or grandchildren over the existing IHT £325,000 nil rate band if they leave their home to them and their total estate is worth under £2 million (cutting out many wealthy clients). A couple could therefore leave a maximum of £1 million free of IHT to a child or grandchild using both nil rate bands and residential nil rate bands. For most HNW and UHNW clients, this barely scratches the surface.
Trusts Vs Family Investment Companies
For many clients, the key word when discussing the passing of wealth to the next generation is: control. For parents unwilling to part with large sums outright, a trust can enable parents to pass assets on to their descendants within a protective environment safe from divorce, creditors and even the children themselves if the trustees have fully discretionary powers. Parents can leave a detailed letter of their wishes with guidance for the trustees covering when the trustees may consider making capital distributions, for instance, although these letters are not legally binding.
However, since most trusts are now within the “relevant property regime”, there are limited ways for a parent to place assets into a trust without incurring an immediate 20% IHT entry charge. Some of the exemptions discussed above can be used to settle assets into trust with no IHT, such as gifts out of excess income, business and agricultural property. Parents may also settle their respective nil rate bands into a trust (£650,000) and repeat this every seven years with no IHT, subject to any other lifetime gifts made in that time.
For parents who have not grown up with family trusts or come from the corporate or financial world, an attractive alternative to a trust is a family investment company (“FIC”) and an excellent mechanism to engage the next generation with family wealth without having to part with total control of their assets.
The founder of a FIC may decide how such assets are invested. When the time is right, the founder may decide to pass on control to other family members – or not! The founder will also often have a key role in deciding which family members benefit from any income generated and when they receive that income via dividends. They could have a detailed shareholders’ agreement containing some of the founder’s views, including, for example, a requirement for pre-nuptial agreements for the family shareholders.
If there is a cash subscription for shares, the 20% charge which may apply on a transfer of property into a trust would be avoided. If the FIC is funded by way of a loan, the loan will remain in the founder’s estate for IHT. Any gifts to the FIC are likely to trigger 20% IHT payable out of the gift and further IHT if the donor dies within seven years. However, any increase in the value of investments is outside the founder’s estate. Unlike trusts, there are no anniversary charges or exit charges for FICst.
Finally, life insurance can be an effective way to pass wealth to the next generation which can help cover any IHT that may be due in the absence of any of the above planning!
Providing private clients and business owners with the insight and experience needed to solve complex UK and US tax and compliance issues
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For over three centuries, Farrer & Co has helped individuals, families and trustees navigate change. The firm spans a unique mix of thirty specialised legal practices, but a single-minded clarity of purpose endures; to provide both domestic and international UHNW clients with exceptional advice and seamless service.
Experts across all legal disciplines bring intelligence, integrity and collaboration to their work, providing bespoke solutions to complex issues.
Farrer & Co: Thoroughly individual legal advice since 1701. Farrer & Co has an absolutely
SQUARE PEGS AND ROUND HOLES – SUCCESSION
BASICS FOR YOUR CARIBBEAN COMPANY
Authored by: Matthew Howson (Counsel) – Harneys
Notwithstanding the reduced offshore presence in the UK over the last few years – although we see our British Virgin Islands and Cayman succession practice growing, it caters much more to Asian, South American and Middle Eastern clients – still, many UK lawyers ask about succession for their client’s property-holding BVI company, and even experienced ones seem surprised by the answers. So I thought I’d provide a short refresher. If the information in this article is too basic for you, we’re doing well!
Will your client even need a BVI Grant if they’re getting a UK one? Much of an offshore lawyer’s practice is about fitting a square foreign legal peg into a round BVI common law hole. English lawyers have an advantage in that they
will generally appreciate that a Grant of Representation must be obtained before the deceased’s shares of the company – and hence their voting rights – can be passed down to their beneficiaries. We very often encounter the misconception however, that a Grant obtained in the deceased’s home jurisdiction is sufficient to pass title to their BVI (and worldwide) assets. If, say, a Saudi lawyer says this it may be because they do not understand the common law system of executors and administration of estates; if a UK lawyer, they may be assuming that since the BVI is a British Overseas Territory, a UK Grant is automatically applicable there with no further Court order required. It is not (nor I believe in any overseas territory or crown dependency).
So, how to obtain a BVI Grant? After c70 years of jurisdictional independence, the process is a very different beast to the UK equivalent and is nearer to our fellow Eastern Caribbean Supreme Court jurisdictions. It essentially involves a bundle of around 10 affidavits and documents submitted to the BVI Probate Registry. Although no inheritance tax is payable, searches must be made, and adverts placed in local newspapers. The affidavits must be drafted according to BVI Court expectations: one very reputable UK firm tried to re-format our draft affidavits into a form that would be acceptable to the English Court and we had to explain that they would probably be rejected. It tends to take a few months to prepare the application documents, mostly depending on the speed of the client to sign them. Once the application is submitted, the Registry is taking on average two to three months to make a Grant, depending on the complexity of the case and in particular whether there is a BVI Will.
form of full application (the Registry tends to prioritise BVI-drafted Wills and generally raises fewer questions), and obviously one can proceed with it immediately after death instead of having to wait for a UK Grant to be obtained. Of the UK clients who ask me this question, it seems to be around half will decide to just stick with their UK Will and the resealing route (they tend to be confident that their estates are simple and so it will be quick to obtain a UK Grant, and make this decision on the grounds of cost) and the other half go for a separate BVI Will (these are people who are concerned about the company being ‘paused’ for a long period of time because of potential problems with their UK estate, so want their executors to be able to begin the BVI process immediately on death).
One fiddly little point that can have a bearing on this choice is the formal validity of the Will, which is another case of square pegs and round holes. As to the essential validity of the Will and other matters of succession, the position is clear and the same as England.
It is decided by the deceased’s domicile, albeit the BVI Court does not ask for any evidence of succession
law during the probate process so the election would only be tested if a disgruntled beneficiary tried to enforce forced heirship, Sharia etc. However, the situation regarding formal validity of Wills (number of witnesses etc) is less clear. There is debate about whether an Order in Council ever extended the 1961 Hague Convention on the Conflicts of Laws Relating to the Form of Testamentary Dispositions to the BVI and other British Overseas Territories. That Hague Convention allows various alternatives: the jurisdiction where the testator was resident, etc. The prevailing view in BVI is that it did not and so under the common law, Wills must be formally valid according to the internal law of the domicile. What if it is not, but that domicile jurisdiction has itself passed the Hague Convention: would that count as being part of the “internal law”? These are questions of “renvoi” about which the English caselaw is often old and unclear. It is expected that BVI legislation will be passed in the next few years to incorporate the Hague Convention alternatives (and possibly more) into BVI law, as it has been in Cayman. But until then, one of the affidavits that must be drafted in a full application needs to be by a lawyer in the domicile jurisdiction confirming formal validity. If a Will is not formally valid under that jurisdictional law, it may be better to reseal the UK Grant if possible, since reseal applications do not need such an affidavit.
But you may ask, is there really no advantage to a UK Grant, to the UK connection? There can be, in that Grants from jurisdictions including the UK, the Commonwealth and (recently) the USA can be ‘resealed’ or confirmed in the BVI. But is this always the way to go: in other words should your client be relying on resealing an eventual UK Grant, or draft a separate BVI Will to begin a separate BVI process? On the one hand, a reseal of a UK Grant in the BVI requires fewer affidavits than the full process, roughly around a third less, with usually corresponding reductions in costs. On the other hand, having a separate BVI Will is the quickest/easiest
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TRUST RESETTLEMENTS IN GUERNSEY
Most families with significant wealth will need to contend with intergenerational wealth transfers. Shifting the responsibility for a family’s long-term financial wellbeing can be a challenging exercise in terms of family dynamics, but also from a technical perspective. In the context of trusts, amendments may need to be made to the terms of existing trusts to ensure that the objectives of an overarching succession plan continue to be met. Whenever amendments to the terms of a trust are proposed, the question of resettlement should always be considered.
There is a substantial amount of academic content available in relation to the risks of resettlement, and what should be done to avoid them. That is usually due to the potential adverse tax implications. This article does not focus on the risks of resettlement but considers what is involved in ascertaining whether a resettlement has occurred. That is not a straightforward question, but clients often ask for a quick yes or no answer to it.
What Is A Resettlement?
Simply put, a resettlement occurs where assets which were subject to the terms of one trust become subject to the terms of another trust. The trustees of each trust may be the same or different. Legal ownership may not change. A specific power of resettlement may be exercised to declare that assets are held on the terms of a separate trust, or certain amendments to trust instruments may constitute a resettlement. A resettlement can occur where a trust is varied to such an extent that the original trust no longer exists. The following sections focus on amendments to trust instruments, as the question of whether a resettlement occurs is more difficult to answer in those circumstances.
The Legal Characteristics Of A Resettlement
There are no Guernsey statutory provisions on the question of whether the exercise of a power of variation or amendment by a trustee constitutes a resettlement. As far as we are aware, there is no Guernsey case law or customary law which specifically addresses the factors which may cause amendments to trust instruments to constitute resettlements.1 In these circumstances, our view is that the Guernsey courts will have regard to English case law, which will be of persuasive authority.
1
Authored by: Gilly Kennedy-Smith (Partner) and William Ostick (Senior Associate) - Mourant
The leading English cases in this area are concerned with the capital gains tax (CGT) liabilities that would arise under UK tax law if a resettlement had taken place.2
Although the question in those cases arose in the context of a potential liability to UK CGT, they applied general English trust law principles to determine whether a resettlement had occurred. In our opinion, the same principles3 are likely to apply under Guernsey law to determine whether there has been a resettlement, even if the same CGT considerations would be irrelevant.
The English cases have found that a resettlement requires:
• Authority, meaning that the terms of the power being exercised must allow the trustee to create a separate settlement by substituting the trusts of the original settlement (without creating absolute interests for beneficiaries); and
• Intention, which is fact-specific (the trustee’s intentions are viewed objectively for this purpose).
The English authorities highlight that the factors that would point towards a separate settlement include:
• Separate and defined property;
• Separate trusts;
• Separate trustees; and
• A separate disposition bringing the separate settlement into existence.4
However, these factors are “...helpful, but not decisive.”5 The English Courts
have held that there is no resettlement where the new trusts are:
• Revocable; and
• Not exhaustive (that is, the assets could again be held on the trusts of the original settlement).
• Potential Amendments to Trusts In The Context Of Next Generation Wealth
Often the rationale behind proposed variations to a trust instrument is to simplify the governance and administration of the trust. The trustee would usually exercise its powers to amend the terms of the trust instrument so that it reflects standard and modern Guernsey law terms. That is usually justified as being in the best interests of the beneficiaries, as it enables greater efficiency in the administration of the trust.
In other circumstances, trustees may need to consider exercising their powers to beneficial interests in the Trust, or to alter any of the dispositive powers of the trustee. That may be required if the original trust instrument and settlor intentions have fallen out of date in light of the circumstances of the next generation. Such amendments will be more likely to give rise to a resettlement.
The following factors, non-exhaustive of course, and taken together, are examples that militate against a resettlement having occurred:
• The proposed amendments do not alter any beneficial interests in the trust, or any of the trustee’s dispositive powers;
• The trustee remains the current trustee of the trust;
• The amendments are intended to modernise the terms of the trust, and to make administration of the trust easier and more efficient, but not to alter the substantive terms of the trust;
• The trustee’s intention is not to create separate settlements, construed objectively; and
• Any amendments are revocable.
Takeaways
The question of whether a resettlement has occurred will never be clear cut. If there is any doubt as to the impact of amendments to a trust instrument, advice should be sought as to whether those amendments would constitute a resettlement. It can be expected that advisers will need sufficient time to consider the circumstances, and analyse the proposed changes in light of the relevant authorities.
Of course, a resettlement may or may not have an adverse tax or reporting implication. Whilst a trustee should always be aware of whether they have created a new trust by exercising a power of amendment, perhaps the first question to consider is whether there a real issue arises if a resettlement occurs. If not, a resettlement will have administrative consequences only. If it does, the amendments should be treated with greater care, and fiduciary duty may require that they are reconsidered.
2 See, for example, Hoare Trustees v Gardner [1979] Ch 10, Roome v Edwards [1982] AC 279, Hart v Briscoe [1979] Ch 1 and Bond v Pickford [1983] STC 517.
3 See, for example, Lord Wilberforce in Roome v. Edwards at pp. 292-293.
4 See Roome v Edwards.
5 Roome v Edwards at 293A.
60-SECONDS WITH:
LIZ PALMER PARTNER, HEAD OF PRIVATE WEALTH HOWARD KENNEDY
Imagine you no longer have to work. How would you spend your weekdays?
I don’t think I would struggle to fill my time, there are so many things I would like to do but don’t quite get there.
What do you see as the most rewarding thing about your job?
I genuinely enjoy getting to know some of the clients I advise and helping those who struggle to make difficult decisions.
What book do you think everyone should read, and why?
This is such a difficult question as it’s so personal – my favourite book is The World According to Garp by John Irving.
What legacy would you hope to leave behind?
I would hope to have made a difference to my colleagues and the development of their careers plus hopefully moving the dial slightly to improve equality in law.
Do you have any hidden talents?
I have a black belt in judo that is pretty hidden away.
What’s the most important quote you’ve heard that you have adapted to your personal or professional life.
Always make time for the people who matter
Is there anything you want to do/achieve that you haven’t already?
This would be less about personal achievement and more about finding a positive way to use my skills to give something back. I haven’t worked that out yet.
What piece of advice would you give to your younger self?
Stand up for yourself and your values.
Where has been your favourite holiday destination and why?
Tofino on Vancouver Island – best fish and chip shop ever overlooking the Pacific Ocean.
Dead or alive, which famous person would you most like to have dinner with, and why?
Billy Connolly – I love his humour and his talent for saying it how it is.
What’s your go to relaxing activities to destress after a long day at work?
Cycling home from work.
What brings you the most joy
Cosmo – the dog I never wanted.
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THE IMPERATIVE OF TRUST IN BUSINESS SUCCESSION: NAVIGATING THE $31 TRILLION WEALTH TRANSFER
The Great Wealth Migration
In the coming decade, an unprecedented global transfer of wealth is set to occur, with over 1.2 million individuals projected to pass down approximately $31 trillion to the next generation. This seismic financial shift, as reported by Altrata1, predominantly involves those with a net worth ranging from $5 million to $30 million. Such a transfer encompasses various liquidity events, including inheritances, gifts, business successions, and philanthropic endeavours, each presenting its own set of tax and legal considerations.
The Challenge of Business Succession
At the heart of this wealth transition often lies the critical issue of business succession. However, only a third of
family-owned businesses manage to successfully pass the baton to the next generation, primarily due to the absence of a formal succession plan. The intricacies of succession are not merely transactional but deeply emotional, necessitating a tailored approach that respects the unique dynamics of each family. Early and proactive preparation of successors is essential, and a well-documented plan is key to tackling uncertainties, circumventing misunderstandings, and averting familial discord, thereby facilitating a seamless transition of leadership.
Family Values and Trust Dynamics
Family businesses are distinct entities that grapple with their own set of management and succession challenges, often compounded by issues of trust within the family. One in four family businesses report a trust deficit between generations, leading to conflicts that not only disrupt internal harmony but also erode trust with external stakeholders. To preserve and foster trust, it is imperative to establish clear communication channels and formal governance structures. Emulating the strategies of non-family businesses, particularly in defining roles and enhancing communication, is critical for the effective management of the intersection of family, business, and wealth.
Authored by: Anthony Spokes (Senior Manager) and Kevin Owens (Senior Manager) – PwC
The Cornerstone of Trust
Trust is the bedrock upon which family businesses are built. This is underscored by the findings of PwC’s 11th Global Family Business Survey2, which included 2,043 family business leaders across 82 countries. The survey revealed that while a majority of leaders feel a strong sense of trust within their family, generational trust gaps and discrepancies between active and non-active family members in the business persist. These trust gaps can precipitate conflicts, with a significant portion of respondents acknowledging the detrimental impact of familial disagreements on external stakeholder trust.
To bridge these gaps, best practice for family businesses involves adopting more structured governance and transparent communication strategies, akin to those employed by nonfamily businesses. This includes the establishment of clear roles, qualifications, and strategies for family members, as well as ensuring that all generations are engaged and informed about the business’s trajectory. Despite a majority of leaders reporting effective communication, a notable one-third still struggle with transparency, particularly affecting the younger generation.
is more pressing than ever.
To cultivate and sustain trust, family businesses can employ a model developed by Harvard Business School professor Sandra J. Sucher, which delineates four pillars of trust: competence, motive, means, and impact. These pillars serve as a framework for evaluating and addressing the relational and operational challenges within family businesses, with the aim of preserving trust and the family legacy.affecting the younger generation.
Engaging With Trusted Advisors
In the dynamic landscape of family businesses, engaging with trusted advisors is paramount. Wealthy families increasingly have a more global footprint than ever before and the nature of the advice needed to navigate these international dynamics is more specialised than has previously been the case.
Governance As a Catalyst for Success
Governance plays a pivotal role in the success of family businesses, safeguarding assets, and ensuring continuity in leadership. It provides a structured framework for defining roles, policies, and decision-making processes. As family businesses expand, the limitations of traditional management based on past practices become evident, necessitating the adoption of formal governance structures. This need becomes particularly acute with business growth, the integration of non-family executives, and the complexities of succession planning.
The evolution of governance in family firms is often driven by the necessity to incorporate external expertise and adapt to more complex operations resulting from organic growth, mergers, international ventures, and innovation. While existing familial systems may have sufficed in the past, the next generation is frequently inclined to implement more formalised governance measures to ensure the business’s future success.
Adapting to Change And Upholding Trust
The PwC survey also highlights the urgency for family businesses to adapt to rapid changes in the business landscape. With 40% of CEOs from the 2023 Global CEO Survey expressing concerns about the sustainability of their companies without transformation, the need for clear leadership and direction
Trusted advisors bring a wealth of experience and an external perspective that can be crucial in navigating complex tax regulations, succession planning, and governance structures. Trusted advisors can help ensure that the business remains compliant with evolving tax laws, such as the recent changes in capital gains tax exemptions and offshore fund reporting requirements. They can also provide invaluable guidance on the strategic allocation of assets, the establishment of trusts, the implementation of taxefficient investment strategies and so on. By maintaining a close relationship with these advisors, family businesses can better manage risks, optimise their tax positions, and secure their financial legacy for future generations.
Conclusion
As we stand on the cusp of one of the largest wealth transfers in history, family businesses are confronted with the imperative of navigating the complexities of trust within the family and with external stakeholders. By emphasising the four pillars of trust — competence, motive, means, and impact — and by embracing more structured governance and transparent communication, family businesses can effectively manage internal dynamics, adapt to change, and secure the longevity of their legacy.
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NEXT GEN WEALTH IN THE HANDS OF NEXT GEN WEALTH PROFESSIONALS
Authored by: Alice Kay (Trust Officer) – Saffery Trust
With an estimated US$15.4 trillion1 set to be transferred to the next generation (“Next Gen”) by 2030, wealth service providers are understandably focused on the emerging cohort of global wealth holders. Equally important, though often overlooked, is the next generation of wealth industry professionals, who will play a pivotal role in shaping the future of the industry.
The Changing Landscape of Wealth
The millennials and Gen Z (born 19812012) set to inherit significant wealth have been recognised for generally having different priorities, attitudes toward money, and expectations from their service providers compared to their predecessors.
These younger generations often have a more global perspective, are more likely to be entrepreneurial, and have strong values2 around sustainability, impact investing, and social responsibility. They are digitally savvy, expect transparency, and are more inclined to collaborate with advisors who understand their lifestyles and beliefs.
As a result, private client service providers must adapt not only their offerings but also how they engage with this new wave of wealth holders.
A key component in successfully navigating this transition is ensuring that Next Gen professionals are at the forefront of service provision. The correlation between Next Gen staff and Next Gen clients is crucial, as both bring fresh perspectives that foster innovation, trust, and long-term relationships.
The presence of Next Gen professionals within private client service firms is essential for successfully managing the needs of Next Gen clients. Younger professionals bring a shared understanding of the values, concerns, and goals of their peers. This shared generational mindset fosters trust and rapport, making younger clients more likely to engage with advisors who they feel understand their world.
Next Gen staff are often more attuned to the latest technological trends, such as blockchain, cryptocurrency, and digital assets, which, in our experience, are of growing interest to clients across all age demographics. They also tend to have a more progressive approach to wealth management, embracing innovations such as environmental, social, and governance (ESG) investing. By having younger professionals in their ranks, private client service providers can ensure they remain relevant and relatable to their Next Gen clients.
have a voice. Providing opportunities for them to contribute meaningfully will ensure their perspectives are integrated into decision-making processes, driving innovation and growth, for the ultimate benefit of both clients and the future of the wealth industry.
Bridging The Generation Gap
Next Gen wealth holders are not just looking for wealth preservation; they want to align their wealth with their values, particularly when it comes to social impact and sustainability.
However, the transition of wealth can also be a point of friction between generations, as older generations may have a more traditional approach to investments and philanthropy. In this context, experienced Next Gen private client service providers play a critical role in bridging the generation gap by facilitating communication and understanding between family members.
Building Lasting Relationships
One of the most important factors in the success of any private client service provider is the ability to build long-term relationships with clients and intermediaries alike. This is especially true when working with high-net-worth families, where relationships can span multiple generations. For these relationships to be successful, trust and understanding must be nurtured over time.
This alignment makes it easier for Next Gen professionals to build rapport and trust with younger clients, leading to more meaningful and productive relationships.
Supporting Professional Next Gens
As the wealth management industry continues to shift (dubbed The Great Wealth Transfer3), the most successful firms will likely be those that recognise the importance of cultivating Next Gen talent within their organisations.
An integral part of this is providing a platform for Next Gen professionals. While previously considered somewhat of a ‘generation on pause’, waiting patiently in line for senior positions to open, the Next Gen has a great deal to offer and contribute.
Initiatives like the STEP Next Gen Committee4 are a prime example of how the industry is adapting to provide more support to the Next Gen, aligned with the changing needs of a modern workforce.
Younger professionals can, potentially, act as ‘cultural interpreters’, helping the older generation understand the perspectives and priorities of their heirs while ensuring the younger generation appreciates legacy of the family.
This role is particularly important in families where wealth has been accumulated over multiple generations, and there is a need to balance tradition with innovation.
Likewise, the Next Gen may bring fresh, innovative perspectives when working alongside more experienced team members. To fully harness this potential, workplaces must foster an inclusive environment that not only welcomes these new ideas but also actively encourages the Next Gen to
Next Gen professionals are uniquely positioned to build and sustain these relationships. They can establish early connections with younger clients, laying the foundation for long-term trust. As they grow with the client, they will be better equipped to adapt their services as the client’s wealth management needs evolve over time.
The future of private client services lies in the hands of the next generation— both in terms of wealth holders and the professionals who serve them. By fostering the development of Next Gen staff, firms can ensure they are well-positioned to deliver client service excellence.
The connection between Next Gen professionals and Next Gen clients is not only a matter of shared age but also of shared outlooks. Both groups are driven by innovation, value transparency, and have a strong interest in using wealth to effect positive change.
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A NEW GENERATION OF GLOBAL CITIZENS
Over the past 20 years, advances in technology and communications have created an interconnected world which, combined with shifting societal trends has made it easier for investors to access opportunities across the globe, fundamentally changing investment behaviours. At the same time, responsible investment and philanthropy have developed a wider appeal. So, what might be in store for the next 20 years as existing wealth is transferred to a new generation of investors and fortunes are made in industries that are perhaps yet to exist? How can advisers ensure conversations with their multigenerational and next-generation clients focus on the right topics? We set out three ideas below:
One: Global Citizens Need Global Investments
The global mindset of this new generation of potential investors is underpinned by an increasingly dynamic education system. In 2023, it was estimated that more than one million international students were studying in
the US1, with many of these hailing from China and India. With the US proposing to ease the H1-B non-immigrant work visa for international graduates2, we will likely see an increase in the next generation permanently relocating to the US after their studies.
In the UK, the academic year of 2021/2022 recorded roughly 680,000 foreign students studying at UK higher education institutions, equivalent to 24% of all higher education students in the UK3.
The next generation of high earners and entrepreneurs will inevitably have even more of a global outlook. Those advising wealthy families should prepare for the shift of wealth to the next generation and the impact of global mobility. While an investment manager’s primary objective is to structure a portfolio to meet clients’ changing investment requirements, they must also be mindful of inadvertent tax pitfalls affecting clients across the globe. For example, the tax considerations for US connected individuals and families are complex and necessitate specialist advice.
More so than ever, investors are diversifying strategically across global markets with the aim of tapping into growth opportunities across equities, bonds, and alternative strategies.
Authored by: Nick Wood (Partner) and Harveer Mata (Senior Investment Manager) - Sarasin & Partners
Encouraging investors to look beyond traditional geographical boundaries enables them to benefit from the potential returns generated by long-term thematic trends in the global economy. In particular, key themes such as demographics, technological progress, and climate change, will continue to reshape our economies radically. Investing in leading global companies which are beneficiaries of these trends is likely to present significant opportunities for the next generation of investors to grow their capital.
increasingly open discussions to understand and respect varying views. This can involve finding common ground and creating diversified portfolios that reflect the collective values and goals of the family, while also educating family members on the potential risks and rewards associated with investing from a responsible standpoint. A good investment manager can guide the conversation to help bridge generational gaps and align investment decisions with the family’s long-term plans for wealth preservation. In certain cases, the flexibility to address specific ethical considerations in a bespoke investment strategy can unlock an opportunity to engage with the next generation of family members.
Two: Evolving Attitudes to Responsible Investment Present Opportunities
Despite recent short-term challenges presented by geopolitical events, longterm capital invested by individuals and families increasingly prioritises responsible investment goals alongside investment performance objectives. It may be a cliché, but it’s often true that these requirements are expressed by members of the younger generation.
Three: Philanthropic Giving
Philanthropic giving has always been at the heart of many wealthy families’ planning in the US, and is becoming more and more prevalent in the UK.
At a fundamental level, scrutinising the environmental, social and governance characteristics of a potential investment makes good sense as a complement to detailed financial analysis.
To state the obvious, poorly governed companies tend to make bad investments. There is much more nuance, however, to the subject of responsible investment and stewardship, and guiding families with diverse views requires expertise and experience.
Families and their advisers are having
Family foundations and donor-advised funds (DAFs) are popular vehicles to facilitate philanthropic giving. These structures provide flexibility, tax benefits, and a strategic approach to long-term charitable giving. DAFs were first established in the US in the 1930s and their use has also become more common in the UK. Dual compliant US/UK charitable structures are also available to transatlantic families.
come with administrative responsibilities and regulatory requirements that can be onerous. DAFs, on the other hand, provide a more straightforward approach with lower costs, while still offering tax advantages. They allow donors to recommend grants to their preferred charities, while the sponsoring organisation handles the administrative tasks.
Investment managers
and their tax advisers can work closely with different generations of a family to determine the most suitable philanthropic structure. This involves assessing charitable and investment goals, levels of retained control and associated costs.
Inheritance and professional success will drive an unprecedented amount of wealth to a new generation. Investment attitudes are evolving and in general, this generation appears passionate about how their investments are managed, and often looks through a different lens. However, much of the research published about the Great Wealth Transfer points to the concern that families are not having the right conversations at the right time. There is a great opportunity for experienced and flexible teams of advisers to help the next generation of investors to focus on key aspects of their financial futures.
Important Information
This document is intended for retail investors and/or private clients. You should not act or rely on this document but should contact your professional adviser.
Nick and Harveer are responsible for the management of UK and international private client portfolios at Sarasin & Partners. Nick is also a director of Sarasin Asset Management, a subsidiary of Sarasin & Partners, which specialises in managing portfolios for US investors.
Whilst family foundations offer control over the distribution of funds and the ability to create a lasting legacy, they
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As wealth is transferred from one generation to the next, distinct perspectives and priorities emerge.
To understand what drives the changing behaviours we are seeing amongst the next generation of High-Net-Worth Individuals (HNWI) and the management of their wealth, it is important to consider the unique experiences that have shaped their outlook.
A State Of Uncertainty
Younger generations have grown up in a world characterised by significant uncertainty.
Throughout their lifetimes, they have witnessed considerable geopolitical shifts, including financial crises and significant changes in global power dynamics, all of which contribute to growing uncertainty about the future of international relations.
They are also more aware of social and environmental matters, with issues such as climate change far more likely to impact them directly in contrast to older generations.
Global Mobility
The world is more connected than ever, with many young HNWIs leading international lifestyles, often traveling between multiple homes, engaging in global business ventures, or seeking educational and cultural experiences abroad.
Pursuing second citizenship or residency in other countries is now commonplace as part of a comprehensive wealth planning strategy. As a result, individuals can now access various benefits such as visa-free travel, better healthcare and education systems, and a secure legal environment for their assets.
“Global mobility requires cross-border and multijurisdictional planning. ZEDRA’s South Dakota trust company commonly works with non-US individuals and families who have a need for a US trust as a part of that planning. Whether pursuing residency in the US, purchasing US-situs assets (e.g. condo in Miami), or leaving inheritance to a USperson family member, a US trust can be a vital planning component.”
Chris Bouwman, Managing DirectorZEDRA South Dakota
For some, having the option to relocate to a more stable country can provide a safety net against political instability, economic downturns, or other risks in their home country, ensuring that their wealth and personal security remain protected.
Prioritising ESG
Environmental, Social, and Governance (ESG) considerations are increasingly important to younger HNWIs, with a higher tendency to prioritise sustainability, social justice, and ethical governance in both their personal lives and financial decisions. ESG investing
Authored by: Chris Bouwman (Managing Director) - ZEDRA South Dakota and Wendy Sim (Managing Director) - ZEDRA Singapore
can allow individuals to align their wealth with these values, ensuring that their financial growth contributes positively to society and the environment.
For many, ESG considerations have become not just an ethical choice but a strategic one. Beyond a purely moral standpoint, younger HNWIs have witnessed the risk to long-term financial returns that environmental degradation, social unrest, and poor governance can contribute to. By integrating ESG factors into their investment strategies, they aim to mitigate these risks, ensuring the sustainability and resilience of their portfolios over time.
Digital Dependence
Technology plays a crucial role in how younger HNWIs manage their wealth. They seek digital solutions, such as mobile apps, for banking and communicating with service providers, and are increasingly open to investing in and managing non-traditional assets such as cryptocurrencies.
In the US in particular, the rise of technology and innovation has inspired a generation that is eager to invest in disruptive technologies and start-ups attracted by the potential of high returns.
“South Dakota directed trusts serve as one tool that HNW and UHNW families have at their disposal to engage younger generations in the matter of managing family wealth. With the correct structure in place, multiple individuals can be named as managers, enabling the sharing of responsibility across generations.”
Chris Bouwman, Managing DirectorZEDRA South Dakota
In Summary
Focus On philanthropy
Younger generations are often keen to use their wealth for social good. This is not just about donating money but borne out of a desire to create sustainable, impactful change. Social enterprises, foundations, and venture philanthropy are popular avenues through which this generation channels their resources.
There has also been a shift in the way in which individuals are choosing to give back. Increasingly, people are seeking to give their time to the causes that resonate with their values, becoming directly involved and engaged.
“With fewer people in the younger generation deciding to have children, wealth planning can become more focused on their lifetimes as opposed to multiple generational planning. They are often looking for charitable causes which they support to contribute to either during or after their lifetimes.”
Wendy Sim, Managing Director - ZEDRA
However, despite the significant improvements and innovations we’ve seen with technological change, reliance on technology can pose its own challenges.
Intergenerational Planning
In the US, the concept of wealth is deeply intertwined with the ever-growing emphasis on individualism and selfreliance. This mindset often manifests in the way younger individuals approach their inheritance. Rather than merely sustaining their family legacy, many seek to make their own mark, often through entrepreneurial ventures or impactful philanthropy.
Similarly, HNWIs in hubs for innovation such as Singapore have grown up amongst a culture of entrepreneurism. However, in contrast to their US counterparts, the values underpinning their business decisions are more inclined to be influenced by familial ties, tradition, and legacy.
“In many Asian cultures, there is a deep-rooted respect for family hierarchy and
an emphasis on preserving and enhancing the family’s wealth for future generations, be it
through traditional means or innovative new ventures.”
Wendy Sim, Managing Director - ZEDRA Singapore
As the next generation of HNWIs rise to prominence, they bring with them a unique blend of priorities and approaches to wealth management that reflect their distinct experiences and values.
From embracing global mobility and prioritising ESG factors, to leveraging technology and rethinking philanthropy, these younger HNWIs are reshaping the wealth landscape. Their perspectives, shaped by an era of rapid technological change, geopolitical uncertainty, and heightened social and environmental awareness, are driving a shift towards more dynamic, ethically aligned, and globally conscious strategies for managing and growing wealth.
As this generation continue to assert their influence, the future of wealth management will likely become more attuned to the complexities of a connected, rapidly evolving world, where values and legacy are as important as financial success.
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